Stonehill v. Diokno Digest

Stonehill v. Diokno

20 SCRA 283 (1967)

Concepcion, CJ

Facts:

1. Respondent (porsecution) made possible the issuance of 42 search warrants against the petitioner and the corporation to search persons and premises of several personal properties due to an alleged violation of Central Bank Laws, Tariff and Custom Laws, Internal Revenue Code and the Revised Penal Code of the Philippines. As a results, search and seizures were conducted in the both the residence of the petitioner and in the corporation's premises.

2.The petitioner contended that the search warrants are null and void as their issuance violated the Constitution and the Rules of Court for being general warrants.  Thus,he filed a petition with the Supreme Court for certiorari, prohibition, mandamus and injunction to prevent the seized effects from being introduced as evidence in the deportation cases against the petitioner. The court issued the writ only for those effects found in the petitioner's residence.

Issue: Whether or not the petitioner can validly assail the legality of the search and seizure in both premises

RULING: No, he can only assail the search conducted in the residences but not those done in the corporation's premises. The petitioner has no cause of action in the second situation since a corporation has a personality separate and distinct from the personality of its officers or herein petitioner regardless of the amount of shares of stock or interest of each in the said corporation, and whatever office they hold therein. Only the party whose rights has been impaired can validly object the legality of a seizure--a purely personal right which cannot be exercised by a third party. The right to object belongs to the corporation ( for the 1st group of documents, papers, and things seized from the offices and the premises).

Citybank N.A. vs. Cabamongan 488 SCRA 517 Digest

Citybank v. Cabamongan 

488 SCRA 517 

G.R. No. 146918 May 2, 2006

Ponente: Austria-Martinez, J.:

Bank negligent

Facts:

1. The Cabamongan spouses Luis and Carmelita are both based in California, USA. The spouses opened a foreign currency time deposit account for their children with petitioner CityBank with a 180-day term. An impostor who claimed to be Carmelita (wife) succeeded to preterminate the time deposit after presenting passport, credit card and other identification.

2. The bank personnel who attended to the transaction ignored several red flags which could have alerted the bank as to the real identity of the person claiming to be 'Carmelita'. For one, she failed to present the certificate of time deposit, there was also a discrepancy in her signature with that in the signature cards of the bank. Finally, the photo in the bank's file did not look like this person claiming to be Carmelita. Despite all these irregularities, the bank went through with the transaction, which only took 40 minutes. The document waiver which the impostor signed was also not notarized, as required under bank's procedures.

3. To the aghast of the spouses, they only came to learn of the incident through a daughter-in-law who called them up in the US. Apparently, a break-in occurred previously in their US residence and several important documents were lost to the thief. The spouses demanded payment from the bank who refused. Hence the filing of the suit against petitioner bank.

4. The spouses presented a PNP Document Examiner expert who analysed the signature and concluded that the signature was forged, hence the discrepancy between the signature of the impostor and the one written in the signature cards held by the bank. 

4. The trial court ruled in favor of the spouses Cabamongan, held the bank negligent and awarded actual, moral and exemplary damages. The bank appealed to the CA which affirmed the lower court's decision. Both parties filed a petition for review on certiorari before the SC where the petitioner insisted that it Carmela who preterminated the TD despite claims to the contrary, while the Cabamongan spouses contended that Citybank's negligence was established by evidence.

Issue: Whether or not the bank is negligent and therefor should be held liable when it allowed the pretermination of the TD in favor of the impostor

HELD:

YES. The bank was indeed negligent as it failed to exercise the highest degree of care and diligence required of it. The banking business is impressed with public interest and of paramount importance thereto is the trust and confidence of the public in general. The Court has held that the bank "is bound to know the signatures of its customers; and if it pays a forged check, it must be considered as making payment out of its own funds, and cannot ordinarily charge the amount so paid to the account of the depositor whose name was forged."(San Carlos Milling Ltd. vs. BPI)

It has been sufficiently shown that the signatures of Carmelita in the pretermination were forged. The petitioner, even with its signature verification procedure failed to detect the forgeries. Citybank cannot label its negligence as mere error. For not exercising the degree of diligence required of banking institutions, it is liable for damages.

Related Digests:
FEBTC v. Pacilan Digest
Bank of America v. PRC Digest
BPI v. Suarez Digest
City Trust Bank v. Cruz Digest

FEBTC v. Pacilan Digest

Far East Bank vs. Pacilan

G.R. 157314 July 29, 2005

Callejo Sr, J.:

Facts:

1. Pacilan maintains a current account with petitioner bank (now BPI). He issued several postdated checks, the last one being check no. 2434886 amounting to P680. The said check was presented to petitioner bank for payment on April 4, 1988 but was dishonored. It appeared that the account of Pacilan has been closed on the evening of April 4 on the ground that it was 'improperly handled'.

2. It appeared that the plaintiff issued four checks from March 30 - April 4, 1988 amounting in total to P7,410, on one hand, his funds in the bank only amounted to P6,981.43, thus an overdraft of P 428.57 resulted therefrom. Consequently, the last check was dishonored despite the fact that plaintiff deposited the amount the following day.

3. Pacilan wrote a complaint to the bank but after the bank did not reply, he filed an action for damages against it and the employee (Villadelgado) who closed the account. The plaintiff alleged that the immediate closure of his account was malicious and intended to embarrass him.

4. The lower court ruled in favor of the plaintiff and awarded actual damages (P100,000) and exemplary damages (P50,000). The bank appealed, but the CA affirmed the lower court's decision with modifications and held that the closure of the bank of plaintiff's account despite its rules and regulation allowing a re-clearing of a check returned for insufficiency of funds, is patently malicious and unjustifiable. Hence, this appeal.

5.  The petitioner contended that in closing the account, it acted in good faith and in accordance with the pertinent banking rules and regulations governing the operations of a regular demand deposit, allowing it to close an account if the depositor frequently draws checks against insufficient funds or uncollected deposits.

Issue: Whether or not the petitioner is liable for damages

NO. The award of damages under Art. 19 of the Civil Code is unjustifiable. The petitioner has the right to close the account of plaintiff based on the rules and regulations on regular demand deposits. The facts do not show that the petitioner abused its rights in the exercise of its duties. The evidence negates the existence of bad faith and malice on the part of the petitioner bank, which are the second and third elements necessary to prove an abuse of right in violation of Art. 19.

The records also showed that indeed plaintiff has mishandled his account by issuing checks previously against insufficient funds not just once, but more than a hundred times.

Moreover, the acceptance by the bank of the deposit the day after the closure of the account cannot be considered as bad faith nor done with malice but a mere simple negligence of its personnel.

As a result, whatever damage the plaintiff has suffered (by virtue of the subsequent dishonor of the other checks he issued) should be borne by him alone as these was the result of his own act in irregularly handling his account.

Bank of America v. PRC Digest

Bank of America vs. Philippine Racing Club

G.R. 150228  July 30, 2009

Ponente: Leonardo-De Castro, J:

Facts:

1. Plaintiff PRCI is a domestic corporation which maintains a current account with petitioner Bank of America. Its authorized signatories are the company President and Vice-President. By virtue of a travel abroad for these officers, they pre-signed checks to accommodate any expenses that may come up while they were abroad for a business trip. The said pre-signed checks were left for safekeeping by PRCs accounting officer. Unfortunately, the two (2) of said checks came into the hands of one of its employees who managed to encash it with petitioner bank. The said check was filled in with the use of a check-writer, wherein in the blank for the 'Payee', the amount in words was written, with the word 'Cash' written above it.

2. Clearly there was an irregularity with the filling up of the blank checks as both showed similar infirmities and irregularities and yet, the petitioner bank did not try to verify with the corporation and proceeded to encash the checks.

3. PRC filed an action for damages against the bank. The lower court awarded actual and exemplary damages. On appeal, the CA affirmed the lower court's decision and held that the bank was negligent. Hence this appeal. Petitioner contends that it was merely doing its obligation under the law and contract in encashing the checks, since the signatures in the checks are genuine.

Issue: Whether or not the petitioner can be held liable for negligence and thus should pay damages to PRC

Both parties are held to be at fault but the bank has the last clear chance to prevent the fraudulent encashment hence it is the one foremost liable .

1. There was no dispute that the signatures in the checks are genuine but the presence of irregularities on the face of the check should have alerted the bank to exercise caution before encashing them. It is well-settled that banks are in the business impressed with public interest that they  are duty bound to protect their clients and their deposits at all times.  They must treat the accounts of these clients with meticulousness and a highest degree of care considering the fiduciary nature of their relationship. The diligence required of banks are more than that of a good father of a family.

2. The PRC officers' practice of pre-signing checks is a seriously negligent and highly risky behavior which makes them also contributor to the loss. It's own negligence must therefore mitigate the petitioner's liability. Moreover, the person who stole the checks is also an employee of the plaintiff, a cleck in its accounting department at that. As the employer, PRC supposedly should have control and supervision over its own employees.

3. The court held that the petitioner is liable for 60% of the total amount of damages while PRC should shoulder 40% of the said amount.

BPI v. Suarez Digest

G.R. No. 167750

March 15, 2010

Carpio, J.:

Facts:

1. Reynaldo Suarez is a lawyer who used to maintain both savings and current account with petitioner in its Ermita branch. Sometime in 1997, respondent had a client who wanted to buy several parcels  of land in Tagaytay but the latter did not want to deal directly with the owners of said land. 

2. Suarez and his client entered into an agreement where the former will be the one to purchase the lands. Both likewise agreed that the client would deposit money in Suarez' BPI account and thereafter, he would issue the checks for the sellers.

3. The client deposited a check with BPI branch. Aware that a check has 3-days clearing time, Suarez' assistant called the bank which confirmed that the said amount had been credited to his account on that same day. Relying on this confirmation, Suarez issued five (5) checks in the name of the sellers. Unfortunately, all checks were dishonored due to insufficient funds. A penalty amounting P57,000 was also debited from his account. The checks were dishonored despite the assurance by RCBC, the drawee bank that the amount has been debited from the account of the drawee. 

4. On top of this, the bank noted on the checks 'DAIF' (drawn against insufficient fund) and not 'DAUD''  (drawn against uncollected deposit). The bank offered to reverse the penalty but denied Suarez claim for damages. Suarez rejected this offer hence the case filed for damages.

5. The lower court ruled in favor of Suarez and awarded actual, moral, and exemplary damages. BPI appealed but the Court of Appeals affirmed the lower court ruling. The CA ruled that the bank was negligent in handling the accounts of the respondent hence the latter's entitlement to damages. Hence this petition.

Issue: Whether or not petitioner bank is liable for its negligence in handling the respondent's account

1. No, BPI was not negligent because it was justified in dishonoring the checks for lack of sufficient funds in Suarez account. There was no sufficient evidence to prove that BPI conclusively confirmed the same-day crediting of the amount of the check to Suarez account. While BPI has the discretion to disregard the 3-day clearing policy, Suarez failed to prove his entitlement to such privilege. 

2. The award of actual damages is without basis since BPI is justified in dishonoring the checks for being drawn against uncollected deposit, hence BPI can rightfully impose the said penalty charges against Suarez' account.

3. The award of moral damages has no basis because Suarez failed to prove that his claimed injury was proximately caused by the erroneous marking of the 'DAIF' on the checks.

4. Suarez is however entitled to nominal damages due to BPI's failure to exercise the diligence required as the bank's business is deemed to be affected with public interest. The bank must at all times maintain a high level of meticulousness and should guard against injury attributableto negligence or bad faith on its part. Suarez therefore has the right to expect a high level of care and and diligence from BPI.

City Trust Bank v. Cruz Digest

G.R. No. 157049

August 11, 2010

Bersamin, J.:

Facts:

1. Respondent Carlos Romulo Cruz, an architect and a businessman, maintained both current and savings account with the petitioner bank in their Loyola Heights Branch. Due to an oversight by its bank employee, the savings account of respondent was closed. This resulted to extreme embarrassment of the respondent when checks he issued could not be honored despite the fact that his savings account has sufficient funds. 

2. Unmoved by the apologies and adjustments made by the bank, respondent filed a complaint for damages before the RTC wherein the said court awarded exemplary damages (P100,000) and moral damages (P20,000) plus attorneys fees. The bank appealed to the CA, but CA affirmed the lower court's decision. The Court of Appeals said that the erroneous closure of the respondent's account would not have occurred if the bacnk had not been careless in supervising its employees. Moreover, the CA explained that the negligence of the bank's personnel was the proximate cause of the damage to the respondent. The CA also denied the bank's motion for reconsideration. Hence, this appeal.

3. Petitioner contends that there were decisive situation facts showing excusable negligence and good faith that did not justify the award of damages.

Issue: Whether or not the bank is liable for the damages caused to the respondent

YES. The petition has no merit. 

1. The petitioner as a banking institution has the direct obligation to supervise closely its employees handling its depositors' account. It should always be mindful of the fiduciary nature of its relationship with the depositors which require it and its employees to record accurately every single transaction, considering that the depositor's account should always reflect the amounts of money the depositors could dispose of as they saw fit. If the bank fell short of this obligation, it should bear the responsibility for the consequences to the depositors, who, like the herein respondent, suffered embarrassment due to the negligence in the handling of his account. 

2. Moreover, in several court decisions, banks are made liable for negligence even without sufficient proof of malice or bad faith and awarded damages each time to the suing depositors in proper consideration of their reputation and social standing. 

3. Finally, it is never overemphasized that the public always relies on a bank's profession of diligence and meticulousness in rendering service. Its failure to exercise such warrants its liability for exemplary damages and reasonable attorney's fees.

Bata Industries v CA Digest

G.R. No. L-53672, May 31, 1982

Facts: 

The respondent New Olympian Rubber Products sought to register the mark "BATA" for casual rubber shoe products, alleging it had used the said mark since the 1970s. The petitioner, a Canadian corporation opposed with its allegations that it owns and has not abandoned said trademark. The petitioner has no license to do business in the Philippines and the trademark has never been registered in the Philippines by any foreign entity. Bata Industries does not sell footwear under the said trademark in the Philippines nor does it have any licensing agreement with any local entity to sell its product.

Evidence show that earlier, even before the World War II, Bata shoes made by Gerbec and Hrdina (Czech company) were already sold in the country. Some shoes made by the petitioner may have been sold in the Philippines ntil 1948. On the other hand, respondent spent money and effort to popularize the trademark "BATA" since the 70's. Moreover, it also secures 3 copyright registrations for the word "BATA". The Philippine Patent Office (PPO) dismissed the opposition by the petitioner while the Court of Appeals (CA) reversed said decision. However, a 2nd resolution by the CA affirmed the PPO decision.

Issue: Does the petitioner have the right to protect its goodwill alleged to be threatened with the registration of the mark?

NO. Bata Industries has no Philippine goodwill that would be damaged by the registration of the mark.

Any slight goodwill obtained by the product before World War II was completely abandoned and lost in the more than 35 years that passed since Manila's liberation from Japan. The petitioner never used the trademark either before or after the war. It is also not the successor-in-interest of Gerbec & Hrdina and there there was no privity of interest between them, Furthermore, the Czech trademark has long been abandoned in Czechoslovakia.

Hickok v CA Digest

G.R. No. L-44707, August 31, 1982

Facts:

Petitioner is a foreign corporation and all its products are manufactures by Quality House Inc. The latter pays royalty to the petitioner. Hickok registered the trademark 'Hickok' earlier and used it in the sale of leather wallets, key cases, money folds, belts, men’s underwear, neckties, hankies, and men's socks. While Sam Bun Liong used the same trademark in the sale of Marikina shoes. Both products have different channels of trade. The Patent Office did not grant the registration, but the Court of Appeals reversed the PPO decision.

Issue: Is there infringement in this case?

NONE. Emphasis should be on the similarity of the products involves and not on the arbitrary classification or the general description of their properties or characteristics. Also, the mere fact that one person has adopted and used a trademark on his goods does not prevent the adoption and use of the same by others on unrelated articles of different kind.

There is a different design and coloring of the trademark itself. The 'Hickok' trademark is in red with white background in the middle of 2 branches of laurel (in light gold) while the one used by Sam Bun Liong is the word 'Hickok ' in white with gold background between 2 branches of laurel in red with the word 'shoes' also in red placed below the word 'Hickok'.

Faberge v IAC Digest

G.R. No. 71189, November 4, 1992

Facts of the Case:

Co Beng Kay applied for the registration of the trademark 'BRUTE' to be used it its underwear (briefs) products. The petitioner opposed on the ground that there is similarity with their own symbol (BRUT, Brut33 & Device) used on its aftershave, deodorant, cream shave, hairspray and hair shampoo/soaps and that it would cause injury to their business reputation. It must be noted that the petitioner never applied for registration of said trademark for its brief products. The Patent Office allowed Co Beng Kay the registration and this was further affirmed by the Court of Appeals.

Issue: Is there confusing similarity between the challenged marks and that its use would likely cause confusion on the part of the purchasers?

HELD: NONE. Co Beng Kay may rightly appropriate the mark. In this case Sec. 20 (Philippine Intellectual Property Law) is controlling. The certificate of registration issued confers the exclusive right to use its own symbol only to those goods specified by the first user in the certificate, subject to any conditions or limitations stated therein. Moreover, the two products are so dissimilar that a purchaser of one (a brief) would not be misled or mistaken into buying the other (such as an aftershave).

Tibay v. CA Digest

Tibay, et. al v Court of Appeals

GR No. 119655, 24 May 1996

Bellosillo, [J.]

Facts:

1.       In January 22 1987, the Petitioner Violeta Tibay (and Nicolas Roralso) obtained a fire insurance policy for their 2-storey from the Private Respondent Fortune Life Insurance Co. The said policy covers the period from January 23, 1987 until January 23, 1988 or one year for P600, 000 and at the agreed premium of P2, 983.50. On January 23 or the next day, petitioner made a partial payment of the premium with P600. 

2.       Unfortunately, on March 8 1987, the said building was burned to the ground. It was only two days after the fire that Petitioner Violeta advanced the full payment of the policy premium which was accepted by the insurer. On this same day, petitioner likewise filed the claim that was then referred to the insurer's adjuster. Investigation of the cause of fire commenced and the petitioner submitted the required proof of loss.

3.       Despite that, the private respondent Fortune refused to pay the insurance claim saying it as not liable due to the non-payment by petitioner of the full amount of the premium as stated in the policy.

4.       The petitioner then brought the matter to the Insurance Commission but nothing good came out. Hence this case filed.

5.       The trial court rule in favor of the petitioner. Upon appeal, the Court of Appeals reversed the lower court's decision and held that Fortune is not liable but ordered it to return the premium paid with interest to the petitioner. Hence, this petition for review.

Issue: W/N the partial payment of the premium rendered the insurance policy ineffective?

 YES.

1.       Insurance is a contract whereby one undertakes for a consideration to indemnify another against loss, damage or liability arising from an unknown or contingent event. The consideration is the premium, which must be paid at the time, way and manner as stated in the policy, and if not so paid as in this case, the policy is therefore forfeited by its own terms. In this case, the policy taken out by the petitioner provides for payment of premium in full. Since the petitioner only made partial payment with the remaining balance paid only after the fire or peril insured against has occurred, the insurance contract therefore did not take effect barring the insured from claiming or collecting from the loss of her building. 

2.       Under Section 77 of the Insurance Code (Philippine), it provides therein that "An insurer is entitled to payment of the premium as soon as the thing insured is exposed to the peril insured against. Notwithstanding any agreement to the contrary, no policy or contract of insurance issued by an insurance company is valid and binding unless and until the premium thereof has been paid, except in the case of a life or an industrial life policy whenever the grace period provision applies." Herein case, the controversy is on the payment of the premium. It cannot be disputed that premium is the elixir vitae of the insurance business because the insurer is required by law to maintain a reserve fund to meet its contingent obligations to the public. Due to this, it is imperative that the premium is paid fully and promptly. To allow the possibility of paying the premium even after the peril has ensued will surely undermine the foundation of the insurance business.